So you want to be a consultant? Here are some tips ...

So, you want to be a consultant? Here are some practical tips & strategies I’ve learned over the past few years. Note, due to LinkedIn character limit, I will be posting the tips as comments (sort by “recent”) as well as a LinkedIn article.

1.      Should you do it? There are many pros and cons to being your own independent consultant. The first question you need to ask yourself is if you really want to do it. Perhaps you have recently lost your job and are looking to consult until you land a full-time position.  In this case, you aren’t losing much, other than trying to manage your time balancing consulting business development, paid consulting work (assuming your business development is bearing fruit), and actively searching for a full-time job – each of these activities can take up a LOT of time. Alternatively, you might be looking for professional freedom and if you are successful, consulting can offer a rewarding career alternative.

a.      In my opinion, the big “pro” of being a consultant is flexibility in terms of schedule (juggling part-time work with family or other pursuits), your physical geographic location (working a short-term project in another city or country) and diversity of work projects (not working the same postage stamp of land for many years).

b.      The “cons” can be significant and include: potentially high variability in cash flow (sometimes you’re working steadily then nothing for several months… you need to determine if you and your family are comfortable with this instability), lack of employer-subsidized medical/retirement benefits (this can be VERY expensive when paying out of pocket), startup costs such as computing hardware & software (if not provided by your client), and lack of independent / entrepreneurial spirit (until your business grows, you will have to wear all the business hats … YOU are the salesperson, the accounting department, the IT support, the technical worker, and the boss reviewing all products before delivering to clients… not everyone is comfortable with this expansion in roles).

2.      If you choose to continue, here are practical aspects of setting up your new consulting business.

a.      Get a business bank account. Depending on your banking institution, this may be free or low cost (especially if you use the same bank as your personal accounts). 

b.      Setup your business. There are two choices here – 1) pay someone $1000 - $2000 to do all this for you, or 2) Do-It-Yourself (nearly free). If you work with a CPA or other financial professional, they may be able to do this for you; in addition, they can provide advice on the business structure that’s best for you (LLC vs S-corp vs other). If you’re going the DIY approach, just Google “Secretary of State _________” (insert name of your state) and you’ll find the paperwork needed to file for an LLC. Once you have your LLC, you’ll be given an EIN (Employer Identification Number).

c.      Make business cards. These are useful when meeting people in person.

d.      Create a marketing location – design a website (to showcase previous projects, technical skills, etc) OR use LinkedIn (post content regularly, leverage your network).

e.      Optional business insurance. Some clients will require you to have liability coverage of ~$1 million; I purchase an annual policy from State Farm that includes this, along with property replacement, for ~$350.

3.      Starting your Business Development

a.      Figure out what your “brand identity” is – because you are selling yourself and your skills, decide on WHAT you’re offering your clients. Are you a specialist or a generalist? If you’re a specialist, you’ll be competing against fewer people but also for fewer jobs; if you are a generalist, the converse is true.

b.      Create a solid “sales plan.” Many geoscientists are humble by nature, but you need to learn to “toot your own horn” because YOU are the only one who will bring in clients. You need to have a good grasp of what it is you’re selling and how what you’re offering can help a prospective client.

c.      Finally, combine the items above into a “marketing strategy.” For this, networking is paramount. Here are three practical approaches to developing consulting job leads:

i. Cast a wide net – here, you are selling yourself outside your network. This can be done through LinkedIn posts, website promotion, volunteering in professional societies, etc. You will have a broader reach but not establish much depth with new contacts. Thus, you may actively chase leads that have a low probability of success. 

  ii. Targeted sales – this is done through rekindling or deepening your existing connections in your network. Depending on your level of network “maintenance” this may only yield a fraction of the leads described above; however, if you are sought by connections or are being referred by someone you’ve worked with closely, these may have a much higher chance of success. 

iii. Work through placement services – efficacy of this can be highly variable, mostly attributable to the company you’re using and how focused they are in your industry. An agency specific to your field (e.g. Subsurface Consultants & Associates for geoscientists and engineers) is more connected to potential job leads you’re looking for, but they have a narrower scope due to their specialization. A larger company (e.g. Brunel, Airswift, Robert Half) can be helpful for broad reach (in terms of industry, professional function, etc) but won’t be as “dialed-in” to highly-specific technical skills.

4.      Deciding your rate. Curb your enthusiasm when you hear “Consultants make $150 per hour … that’s like $300,000 a year!” … not quite. 

a.      Some companies will just tell you what they’re paying you. There may be room for negotiation, but sometimes not. If they ask you what your preferred rate is, you need to have a number ready (as well as an acceptable range in mind).

b.      Other considerations, such as the following factors, go into determining your consulting rate – your years of experience, the depth of your subject matter expertise, and the length of contract (a long-term or open-ended contract may pay less but be more stable than a two-week short assignment). Important things to consider: 1) a bonus is not likely, 2) benefits will not be paid for, and 3) you may be working ~50-75% of the year.

c.      So, let’s run some numbers. Say you want to match your previous gross salary of (for round numbers sake) $100,000 / year base + 20% bonus. $120,000 / 2000 (approximately 40 hrs/wk x 50 wks/yr) = $60 / hr. Add 25% to this to account for lost benefits (401k with employer matching, medical, dental, life insurance, etc) = $75 / hr. Assume you’re only working 50-75% of the year so you end up with = $100-150 / hr. As you can see, $150 / hr is not $300,000 per year.

5.      Determining your software needs - Access to expensive software packages is something you will certainly miss as a consultant. First, assess what you really need versus what you “would like to have.” Get creative and remember every dollar spent must be justified (only spend money on software if it will pay for itself by obtaining and completing paid work). Here are some tips:

a.      Search for Open Source /free versions of software you use (QGIS, Open dTect, etc). Look into SWUNG (software underground) as well as AAPG EMD’s “Freeware for Freelancers” webinar series (past recordings are on YouTube).

b.      Many companies have special pricing structures for consultants. For example, one company I know will lease a license to a proven independent contractor at a rate of $1000 per year what would normally cost $50,000 for a company to purchase one license (plus annual maintenance). Another example the software vendor will grant free access to independent contractors as they are generating new work (e.g. prospecting, building new projects, etc) and only charge them when they are billing a client (on-sell to the client) for the work. If you’re not sure about these options, ask the account manager assigned to your region; if they don’t know, as other consultants using the software.

6.      Types of Consulting – recognize that every consulting job is different. I’ve worked three paid consulting jobs over the last three years and they were each drastically different. In one position, I was a fully-integrated member of the team (working alongside salaried employees, attending town hall meetings, etc) active in several long-term projects but was paid an hourly rate for flexibility reasons (both for the client’s benefit as well my own desired flexibility). In another job I was brought in to work on a single specific project for pre-determined amount of time (still an integrated member of the team, but it was a short-term study). In my current consulting role, I am working independently as the only geoscientist responsible for an area (regular interaction with my manager who is a geoscientist and only limited interaction with team engineers) – there is much less technical collaboration and support. These anecdotal descriptions of my three roles illustrate how very different consulting gigs can be – and the important thing is to be comfortable and flexible working effectively & efficiently in a variety of different work settings and situations.